3. Common Accounting Entries Flashcards
Entry: Receiving Mortgage Funds from the lender
CR: Client Ledger Account
DR: Cash Sheet Client Account
Entry: Sending mortgage funds to the seller
DR: Client ledger account
CR: Cash sheet client account
Entry: Receipt of deposit by seller’s solicitor (agent)
CR: Client ledger account for that seller
DR: Cash sheet client account
Receipt of deposit by the seller’s solicitor when holding the deposit as stakeholder
At exchange:
CR Client ledger stakeholder (stakeholder ledger)
DR Cash Sheet client Account
On Completion
DR Stakeholder Ledger
Credit Client ledger account for that seller (client)
Money received from client to reimburse firm for a paid disbursement
CR: Client ledger business account for that client
DR: Cash sheet business account
Non-client money paid out
DR: Client ledger business account
CR: Cash sheet business account
Non-client Money paid out from petty cash
DR: Client ledger business account for that client
CR: Cash sheet petty cash account
Client money received and paid into separate designated client account:
CR: Client ledger SD client account for that client
DR: Cash sheet separate designated client account for that client
Client money paid out from a separate designated client account
Debit Client ledger separate designated client account for that client
CR: cash sheet separate designated client account for that client
Transfer from client account to business Account - two entries
DR: Client ledger client account for that client
CR: Cash sheet client account
AND
CR: Client ledger business account for that client
DR: Cash sheet business account
Transfer from business account to client Account - two entries
DR: Client ledger business account for that client
CR: Cash sheet business account
AND
CR: Client ledger account for that client
DR: Cash sheet client account
Transfer of client money from the client account to separate designated client account
DR: Client ledger account for that client
CR: Cash sheet client account
AND
CR: Client ledger separate designated client account for that client
DR: Cash sheet separate designated client account for that client
Transfer between two clients when the money is remaining in the client account
DR: Client ledger client account for client transferring
CR: Client ledger client account for client who is receiving
Payment of mortgage monies from the lender to the borrower when the solicitor does NOT have a separate client ledger for the buyer’s lender:
CR: Client ledger client account for that client
DR: Cash sheet client account
Payment of mortgage monies from the lender to the borrower when the solicitor DOES have a separate client ledger for the buyer’s lender:
- Money is received from lender
CR: Client ledger account for the lender
DR: Cash sheet client account
- Mortgage money transferred to buyer from the lender
DR: Client ledger account for lender
CR: Client ledger account for borrower / buyer
Payment of mortgage redemption monies to the lender from the borrower (Seller): when the solicitor does NOT have a separate client ledger for the seller’s lender
DR: Client ledger client account for the seller
CR: Cash sheet client account
Payment of mortgage redemption monies to the lender from the borrower (Seller): when the solicitor DOES have a separate client ledger for the seller’s lender
- transfer redemption money from seller to lender
DR: Client ledger client account for seller
CR: Client ledger client account for lender
- Pay out the redemption money to the lender
DR: Client ledger client account for the lender
CR: Cash sheet client account
Payment of interest earnt by a separate designated client account
CR: Client ledger separate designated client account for that client
DR: Cash sheet separate designated deposit client account for the client
PAYMENT, OF A FAIR SUM OF INTEREST ON CLIENT MONEY, TO AN INDIVIDUAL CLIENT FROM INTEREST EARNT BY THE CLIENT ACCOUNT
- First record the receipt of the interest earnt by the client account into the firm’s business account:
CR: Interest receivable ledger
DR: Cash sheet business account
- Then transfer the amount which is a fair sum of interest to the client
DR: Interest payable ledger
CR: Cash sheet business account
AND
CR: Client ledger client account
DR: Cash sheet client account
Issuing a bill + VAT
DR: Client ledger business account for amount of bill of costs less VAT
CR: Profit costs with amount of bill of costs less VAT
AND
DR: Client ledger business account for VAT on bill
CR: VAT Account with amount of VAT on the bill of costs
Client paying a bill issued to them: Via Cheque
CR: Client ledger business account for that client
DR: Cash sheet business account
Client paying a bill issued to them - instructed to transfer money from client account to business account
(Total amount transferred will be bill + VAT)
- Withdraw money from client account
DR: Client ledger client account for that client
CR: Cash sheet client account
- pay money into business account
CR: Client ledger business account for that client
DR: Cash sheet business account
Issuing a bill + VAT to a lender who does not have a separate client ledger
DR: Client ledger business account for the borrower with the amount of the bill (less VAT)
CR: Profit costs
AND
DR: Client ledger business account for borrower with the amount of the VAT on the bill
CR: VAT Account
Issuing a bill plus VAT to a lender who has a separate client ledger
DR: Client ledger business account for the lender with the amount of the bill of costs (Less VAT)
CR: Profit Costs
AND
DR: Client ledger business account for lender with amount of VAT on the bill of costs
CR: VAT Account
THEN borrower usually pays lender’s bill - costs need to be transferred from the lender to the borrower
DR: Client ledger business account for the borrower with the total amount of the bill of costs PLUS VAT
CR: Client lender business account for the lender with the total amount of the bill of costs PLUS VAT
Reducing a bill (+VAT)
Credit client ledger business account for that client with the amount the bill
of costs (less VAT) is being reduced by
Debit profit costs with the amount the bill of costs (less VAT) is being reduced by
AND
Credit client ledger business account for that client with the reduction in VAT on the bill of costs
Debit VAT account with the reduction in VAT on the bill of costs
Writing off a Bad Debt and its VAT
Credit client ledger business account for that client with the amount of the debt being written off (excluding VAT)
Debit bad and doubtful debts with the amount of the debt being written off
(excluding VAT)
AND
Credit client ledger business account for that client with the amount of VAT in respect of the unpaid debt
Debit VAT account with the amount of VAT in respect of the unpaid debt
Paying a disbursement plus VAT as an AGENT
- If there is sufficient client money, use this
Debit client ledger client account for that client for the cost plus VAT (as one
figure)
Credit cash sheet client account for the cost plus VAT (as one figure)
- Or if there is insufficient client money held for client - use business account
DR: Client ledger business account for that client for costs plus VAT (one figure)
CR: Cash sheet business account for cost plus VAT as one figure
Paying a disbursement plus VAT as principal
When the authorised body pays the cost plus VAT:
Debit client ledger business account for that client with the amount of the
cost (excluding VAT)
Credit cash sheet business account with the amount of the cost (excluding
VAT)
AND
Debit VAT account with the amount of VAT in respect of the cost
Credit cash sheet business account with the amount of VAT in respect of the
cost
When authorised body issues a bill to the client
Debit client ledger business account for that client with the amount of VAT
in respect of the cost
Credit VAT account with the amount of VAT in respect of the cost
